Key Takeaways:
- HP cut its fiscal 2026 profit forecast to $2.15-$2.45 a share from $2.47-$2.77
- Rising memory chip costs are squeezing margins despite a commercial PC recovery
- Shares fell over 2% in pre-market trading on the guidance reduction
Back
HP cuts profit forecast 11% as memory chip costs squeeze margins
HP Inc. cut its full-year profit forecast by as much as 11%, blaming rising memory chip costs that are squeezing margins even as a recovery in commercial PC sales boosts revenue.
"Memory component costs have risen faster than we anticipated, pressuring our ability to offset them through pricing," Chief Financial Officer Karen Parkhill said in a statement.
The company now expects fiscal 2026 profit of $2.15 to $2.45 a share, down from a prior range of $2.47 to $2.77. Adjusted earnings are seen at $2.90 to $3.10 a share, trimming the upper end from $3.20. Analysts surveyed by FactSet were looking for $2.87.
HP reported fiscal second-quarter revenue and profit that rose from a year earlier, helped by a rebound in corporate PC upgrades. But the improved top line was overshadowed by the cost pressure from memory components, which include DRAM and NAND flash chips used in PCs and servers. The company also flagged that some customers accelerated purchases in the first half, potentially pulling forward demand that would otherwise materialize in the fourth quarter.
The guidance cut comes as the PC industry navigates a patchy recovery. Commercial demand has picked up as businesses refresh aging fleets, but consumer spending remains subdued. HP's warning echoes concerns across the hardware supply chain, where memory prices have climbed sharply since late 2025 amid tight supply from major producers.
Shares fell as much as 2.4% in pre-market trading in New York on Wednesday. The stock had gained about 8% year-to-date through Tuesday's close, partly on optimism about the commercial PC cycle.
The reduced outlook signals that margin pressure from component costs may persist through the second half. Investors will watch HP's quarterly earnings call later Wednesday for details on pricing strategy and whether the company expects memory costs to moderate in coming quarters.
This article is for informational purposes only and does not constitute investment advice.
[1] HP Cuts Full-Year Outlook Despite Higher Second-Quarter Profit, Revenue - WSJ[2] Ferrari's First-Ever EV Is Here, But RACE Stock Declines Pre-Market As Investors...[3] Stock Index Futures Climb on AI Optimism and U.S.-Iran Peace Deal Hopes[4] The unofficial start to summer could be tough for stocks. Here's what's ahead
